Insider Buying

Insider buying: Tenet Healthcare CFO invests $474k in stock

Tenet Healthcare Corp
(THC:US)
12 months:
-37.29%
Activity:
Bullish
Pattern:
Large purchase from CFO
News:
Q3 results
Tenet Healthcare Corp
(THC:US)
12 months:
-37.29%
Activity:
Bullish
Pattern:
Large purchase from CFO
News:
Q3 results
 The image's background depicts a doctor in white uniform holding stethoscope, with the blog introduction mentioning the insider's investment of $474K on top.

CFO stock purchases can provide valuable trading insights. CFOs tend to have a detailed understanding of their firms’ financials and some studies have found that these insiders earn higher profits from their purchases of company shares than CEOs.

In this report, we are going to highlight a large CFO purchase at Tenet Healthcare Corp (THC:US). Tenet Healthcare is a diversified healthcare services company that operates hospitals, ambulatory surgery centers, outpatient centers, imaging centers, off-campus emergency departments, and micro hospitals across the US. It is listed on the New York Stock Exchange and currently has a market cap of $4.8 billion.

Insider buying at Tenet Healthcare

Our insider transaction data shows that on October 26, Tenet’s CFO Daniel Cancelmi purchased 11,000 THC shares at a price of $43.07 per share. This trade cost the insider approximately $474,000 and increased his holding to 392,815 shares.

Company experience

Mr. Cancelmi has considerable company experience. He joined Tenet as CFO of Hahnemann University Hospital – a former Tenet hospital in Philadelphia – and in 1999 transitioned to the company’s corporate office in Dallas where he served in a variety of finance positions, including vice president and assistant controller. He was appointed CFO in 2012. Given his experience, he is likely to have an excellent understanding of his company’s prospects.

It’s worth noting that Mr. Cancelmi has made well-timed stock purchases in the past. On March 13, 2020, he picked up 19,220 THC shares at a price of $15.79 per share. Over the next 12 months, the stock rose about 470%. Our Insider Model views his latest stock purchase as bullish.

$1 billion buyback announced

Tenet Healthcare shares recently experienced a sharp fall after the company posted its Q3 earnings.

For the quarter, net income from adjusted operations came in at $131 million, down from $448 million a year earlier. Meanwhile, adjusted diluted earnings per share were $1.44 versus $1.99 in Q3 2021. The lower level of profitability was driven by higher contract labor costs and greater-than-expected Covid-19 prevalence.

What’s interesting, however, is that the company announced a $1 billion share repurchase program in the Q3 results. This indicates that management is confident about the future and that it sees value in the stock right now.

“Our business continues to generate strong free cash flow, enabling us to authorize a share repurchase program that balances our uses of capital with investments to grow the business and debt retirement,” said CEO Saum Sutaria.

The large purchase from Mr. Cancelmi suggests that he also sees value in the stock at present. We view this insider buying activity as a bullish indicator.

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